NUA and “Equivalent Shares”
I have 401k plan. I have substantial amount in ESOP (which came from company match into 401k) and Company Common Stock (this is company stock that I bought on my own while being 401k participant). The ESOP and Company Common Stock in the 401k are expressed as “Equivalent Shares”. I am over 59.5, and plan to utilize NUA option when taking ESOP and Company Common Stock money as part of LSD from the 401k. Does my company needs to “convert” these “Equivalent Shares” into real company shares when transferring NUA portion into the separate brokerage account? If not — what would be transferred to the brokerage account?
Permalink Submitted by Alan - IRA critic on Sun, 2019-09-08 15:11
Your company shares are probably held in a “unitized stock fund” which is treated as being “equivalent” to actual shares and can be converted to such shares when you take your LSD. As such the units must be converted to actual company shares when distributed to your taxable brokerage account. If so, you can then utilize NUA for those actual shares.